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Group 2 : Ethics And AirbusGroup Member : Shakeela, Ng Wun Shi, Ali & Ralph Yew 17
July 2010 MKT 5708 International Marketing Facilitator: Mr. Liew Kok Hong MKT 5708
2. 2. Table of Contents1. Introduction & Business Issues 2.
Who Benefits and Who Suffers from Ethical Lapses of Airbus?3.
Response of Public Relations Staff of Airbus4.
What steps from Boeing to counter such competition 5.
How Boeing and Airbus behaves in marketing their aircraft around the world?6.
If France adopted OECD convention on bribery, would the outcome be different?7.
Suggestions 8. Conclusion & Thoughts to ponder! 2
3. 3. Introduction Business IssuesCasestudy Intense Competition Boeing, Intense
Competition Boeing, Lockheed, Airbus and McDonnell Lockheed, Airbus and
McDonnellBusiness ethics is the study of business situations, Douglas- Douglasactivities, and decisions where issues are right orwrong are addressed. How do you
differentiate Airbus accused of giving bribe to Airbus accused of giving bribe tobetween
"Doing what is right" and "Doing the right get business orders get business ordersthing
the right way"? International politics and sosio-cultural play a big role in the International
business. The International unethical The International unethical leadership management
issues leadership management issues due to the impacts of socio-culture due to the
impacts of socio-cultureAirbus and politics in International and politics in
InternationalStarted in 1970. Airbus is an unwieldy confederation market. market.of four
European (France, UK, Spain, Germany)aerospace firms. Airbus is 80 percent owned by
the The challenges of business topublicly traded European Aeronautic Defence and
sustain in a competitive unethicalSpace Company, and 20 percent by British international
market dominated by socio cultural politics.Aerospace. The final assembly lines used by
Airbus TRADE WARare in France, Germany, Spain, for the Airbus A400 and China for
the A320 series. 3
4. 4. Who benefits from Airbus lapses in ethics Competitor like Boeing, Bombardier and
Embraer may benefit in short term due to Airbus lapsesKuwaiti Kickbacks India InkBenefitted ALAFCOs El Fekih and KACs Al - Benefitted Rajiv Gandhi and his Indian
AirlinesMishari & Airbus for the first few planes purchased. associates and of course
Airbus Ind.- Suffered by Airbus because they lost the deal / - Because they received a
large sum of unaccountedorders when Mallah provided the watchdogs and kickbacks
from Airbus for the purchases made inMinistry of Finance full details of ALAFCOs orders
1985. Gandhis file on this order vanished.for the cargo planes. - Later in year 2000,
Airbus suffered when it lost a- Why? Because Misharis plans to bypass formal deal when
the Indian Government has declined thegovernment approval by forming ALAFCO has
purchase of 43 Airbus planes worth $2 billion.failed and when the Ministry of Finance
knew he full - Why? This is mainly due to the noncompliance anddetails they cancelled
the orders. . unwillingness of Airbus and the French government to cooperate to answer
the CBI (Central Bureau Investigation) questions.Syrian Scandal- Benefitted Airbus
because the purchase were Mounties and Banksmade for $240 million. - Benefitted
Karlheinz Schreiber, Airbus Senior-Why? Because Airbus denied paying off the VP in
France, some people in Shell companySyrian officials. subsidiary International Aircraft
Leasing (IAL) and- Suffered by Syrian Air as it has incurred big the Canadian PM Brian
Mulroney and Airbus Ind.financial lost. The three men (former minister of - Suffered by Air






Canada as it took a long time forforeign affair, former transport minister and the
investigation took place.middlemen Munir Abu Khaddur) also had to pay a - Why?
Because for a long time no has come frontfine of $268 million and sentenced to prison for
10 to expose the corruption they found. This is mainlyyears. because it involved the
Canadian prime Minster. 4
5. Who suffers from Airbus lapses in ethicsFirst airbus suffers because after this scandal
customers willmake deals very carefully with airbus , and also it made badreputation in
international marketing for itself.Second the Canadian government because the people
loosedtheir trust to them .Third the middleman (s) , after that they couldnt easily work
ininternational marketingOther airlines and state government for purchases and
largepayments made to Airbus ie lost of Sabena Air. 5
6. Response from Public Relation on Airbus lapsesThe Public Relation staffs should
make- proper researches on the truth of the criticism and make correctivestatement in the
same articles to protect save the image of Airbus.-provide press releases including
comments clear and enforceableguidelines for the way in to defend itself from this sort of
competition withBoeing. Providing Damage Control assistance.-Promote Airbus CSR
activities to create a better image of Airbus,develop biofuel that could be used by 2030.
This flight and the companyslong term efforts are considered big strides towards
environmentallyfriendly aero planes.-Other CSR activities such as Airbus should have
build new Aerospace &aeronautical design Engineering schools and provide free tuition
fees toboost its image. Students of this school can be bonded for some yearswith Airbus
and given jobs in Airbus later. 6
7. How Boeing Deal with CompetitionBuilding Boeing reputation as Bribery Free
Company.Ensure All the Aircraft is build with quality and value for price.Transparent in
all the business deal and prevent unfair dealing.Develop more advance aircraft which is
more efficient, fasterand reliable.Boeing use US Government to coercive influence
decision making ofbuyers (purchases of aircraft for exchange of US services)Uses spy
intelligence methods to obtain information of Airbus lapses anduse the info to threaten
the purchaser of disclosing the unethical deals.Boeing used GATT to come up with the
OECD convention on anti-bribery 7
8. Difference between Boeing and Airbus MarketingBoeing-Competitive price and quality
& Influence power of US GovernmentReason-Long history in the market-Big customer
based, achieve Cost efficiency-A lot of country relied on US Government on the economy
and securityAirbus-Offer high commission to middleman & politiciansReasonMiddleman able to influence or even make decision for thestate politicians 8
9. The OECD convention on briberyThe OECD convention on combating bribery, would
HAVE AGREED AS FOLLOWS:Article 1 - The Offence of Bribery of Foreign Public
Officials1. Each Party shall take such measures as may be necessary to establish that it
is a criminaloffence under its law for any person intentionally to offer, promise or giveany
undue pecuniary or other advantage, whether directly or through intermediaries, to a
foreignpublic official, for that official or for a third party, in order that theofficial act or
refrain from acting in relation to the performance of official duties, in order to obtainor
retain business or other improper advantage in the conduct of intl busines2. Each Party
shall take any measures necessary to establish that complicity in, includingincitement,
aiding and abetting, or authorisation of an act of bribery of a foreign public official shallbe
a criminal offence. Attempt and conspiracy to bribe a foreign public official shall be





criminaloffences to the same extent as attempt and conspiracy to bribe a public official of
that Party.3. The offences set out in paragraphs 1 and 2 above are hereinafter referred to
as bribery offoreign public official ECU MKT 5708 9
10. How would that be different for Airbus if France adopted OECD convention on antibriberyAirbus will have to toe the line in all its international business dealing if
Franceadopted OECD convention on anti-bribery.Airbuss reputation and scandal in the
Air Canada could have been avoided.Airbus would have to report to their ethnic
committee in all international dealing andthe move result in good corporate
governance.The competition would have no reason to attack Airbuss business practices
ofusing middlemen and lobbyist to secure new overseas Governments contractAirbus
sales would have dropped badly and lost millions of dollars. Most of thecountries would
have purchased Boeing in order to get US Government favors.Due to the lost in
business Airbus would have to retrench its workers.Airbus would not have produced its
latest s A380.Airbus will always be the number two successful airlines after Boeing. 10
11. SuggestionsA good leadership in Airbus Industrie will make the company
morestronger, although the involvement of socio-cultural to politics isprominent to obtain
big orders.Elimination of middleman is a must to cut down on unnecessary payingof
kickbacks and bribes to the polititions and top level managementpeople. There will be no
more seaside villas in Mexico or big shoppingplazas in Kuwait for corrupted men.Instead
establish agents with standardized minimal commissionpayments to the appointed
agents. Agents who will abide with standardagents and suppliers manufactures
rules.Improve the technology quality and performance in order to cut downon turn-around
time will bring more profits to Airbus.Promote Go green environment clean air and less
carbon emission bio-fuels. Create a good image and brand building.
12. Conclusion Bribery and corruption have a very detrimental effect on an economy and
the World Bank has estimated that 0.5% Companies need to of GDP is lost through
corruption each continuously maintain integrity year. and transparency when
expanding their international Engaging in corrupt practices also
business to new geographic creates a very unfavourable business
market if they want their environment by encouraging unfair
business to sustain for a long term. advantage and anti-competitive practices. As well as
allowing organised crime to flourish, corruption is one of the primary obstacles to the
economic development of a country; it undermines the rule of law, weakens trust in public
institutions and challenges democratic principles. 12
13. Thoughts To Ponder! The Boeing and Airbus quests for dominance have been quite a
roller-coaster ride for both with no end in sight. The history of their competition provides a
good case study for best-practices in strategic planning. Although businesses must
compete fairly and honestly but again it is a question of doing the right thing the right way,
so what is the right thing and the right way? Bribing and receiving kickback are a norm
life style & culture in many countries. So are we to follow their socio-culture? Some
country men want business to be as If you go to Rome do as the Romans do. So if you
want to do Business and survive the roller coaster ride, there are times you have to do
what the Roman do in their country. Follow the ride and their political socio-culture???.